Memorandum counsel

University of World Economy and Diplomacy



MEMORANDUM



Counsel

Shahlo Kakhramonova

4^th course

International law

1-1a-19

SUMMARY OF FACTS

This case includes the analysis of the dispute arising from the Contract between the Uzbek Buyer and the Polish Seller. In brief, an Uzbek company engaged in the production of pharmaceutical products enters into an agreement with a Polish company in order to protect its products from counterfeits. According to the Contract, the Polish company will supply the Buyer with a special holographic label, thereby protecting its products from counterfeiting. The terms of the Contract are agreed between the parties and all circumstances are considered.
The criteria for what type of hologram should be provided by the Buyer is determined, but not shown to the Seller as a sample. As a result, the first batch of goods sent by the Seller does not meet the Buyer’s requirements. He discovered this through tests in his laboratory and immediately informed the other party.
This is where the conflict arises. One party claim that the goods are not in accordance with the Contract, and the other party demands money for the goods and claims that they cannot cancel the Contract.

LEGAL EVOLUATION

Before evaluating this legal case, let's face several problems.
Does the criterion demanded by the Buyer on the quality of the product correspond to the requirements in the Contract?
At the time of signing the Contract, the Buyer did not provide any information on the problem that is currently being raised. General concepts are indicated, but it is not clearly stated what kind of goods, that is, what type of hologram is needed by the Buyer.
As stated in Article 35 of the CISG, the product provided by the Seller must comply with the requirements of the Contract, and such a condition is also included in this Contract.
In this matter, the Buyer should provide a sample or clear instruction to the Seller. But such action was not taken by the Buyer.
On January 29, 1998, the Helsinki Court of Appeal ruled that this action should be taken by the Buyer and denied that the product was non-confirming.
In the present dispute, this issue raised by the Buyer is inappropriate.
Moreover, it is a known fact that, after the dispute, the Buyer will pay the value of the first shipment and will not pay for the remaining batch. From this it can be understood that the Buyer is ready to pay for the product, which he considers non-confirming, and has accepted it. Because the product is suitable for its purpose.
Another important point to note is that any laboratory work carried out under the Agreement will be carried out in the presence of impartial witnesses and in special places. In this case, Buyer carried out the inspection work in his own laboratory. This is another proof of the relevance of the issue raised by Buyer.
Is it possible to avoid the Contract?
It is not possible for the Buyer to unilaterally refuse to perform the Agreement and unilaterally breach the Contract.
Article 49(1) (a) CISG provides that avoidance is possible, and only possible, “if the failure by the Seller to perform any of his obligations under the Contract or this convention amounts to a fundamental breach of Contract.” According to Article 25 CISG, a breach is fundamental “if it results in such detriment to the [buyer] as substantially to deprive him of what he is entitled to expect under the Contract, unless the [seller] did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.
According to Art. 46(2) of the CISG, if the goods do not conform with the Contract, the Buyer may require delivery of substitute goods only if the lack of conformity constitutes a fundamental breach of Contract and a request for substitute goods is made either in conjunction with notice given under article 39 or within a ­reasonable time thereafter.
Therefore, the lack of conformity must be so serious that the Buyer cannot be required to retain the goods and could not be adequately compensated by damages or a price reduction (Construction materials case). The substantiality of the detriment to the Buyer may be ascertained by having regard to the express stipulations of the parties, the purpose for which the goods are bought, and finally, to the question of whether it is possible to cure the defect.

ARBITRAL DECISION

1. 
   Steel plates case – http://www.unilex.info/cisg/case/490
   
2. 
   Construction materials case – http://www.unilex.info/cisg/case/1152